Bankruptcy protection can save those struggling with debt from financial ruin. However, it does come at a cost for your credit score.
So, how do you know if filing for bankruptcy is your best option or a choice you’ll regret? Here are a few signs that typically mean it is time to start considering filing for bankruptcy protection.
You can’t afford things you actually need
The best way to save money is to only pay for basic necessities. These only include expenses you absolutely cannot live without, such as:
- Hygiene products
- Utility bills
- Your rent/mortgage
In addition to only sticking to the basics, you can also try to cut down the cost of the basic necessities you purchase. For example, you can save a lot by cooking your own meals, rather than eating at a restaurant.
However, if you’re finding that you have no funds left over for basic necessities after paying your bills, you’re definitely going to need bankruptcy protection to get your finances back on track.
Your wages are being taken
One way that creditors can attempt to collect unpaid debt from you is by taking part of the wages you earn at work. In fact, in New Mexico, collectors can take up to 25% of a debtor’s wages.
Unfortunately, this leaves you with a smaller income to pay for basic necessities and can still cause you to accumulate other debts. Filing for bankruptcy will immediately put a halt to wage garnishment.
Your house may be foreclosed
If your home goes into foreclosure, your credit score will suffer a big hit in any case. This will make it difficult to find a new place to live whether you are renting or buying.
By filing for bankruptcy, you may be able to stop your home from being foreclosed. However, this depends on the type of bankruptcy you qualify for, so you should consult with a bankruptcy attorney for help if you are facing foreclosure.
Creditors are suing you
Some creditors may initiate a lawsuit to try to collect your unpaid debts. This will cost you more time and money in court fees, attorney expenses and the ultimate court order.
However, by filing for bankruptcy, you can stop an impending lawsuit from proceeding and either wipe out this debt or create a payment plan to pay it off.
You’re feeling desperate
If your debts are keeping you up at night, you can always consult with an attorney to determine if bankruptcy is right for you. A bankruptcy lawyer can help you reach a settlement with creditors or tell you which types of bankruptcy you qualify for. This way, you’ll get advice on the best course of action to take based on your unique circumstances.